Ferguson PLC Announces Results for Q2 and H1 ended January 31, 2022

Rhea-AI Summary

Ferguson PLC reported impressive Q2 and H1 results for the period ending January 31, 2022. Net sales reached $6,508 million, marking a 31.8% increase compared to the previous year. Operating profit surged 74% to $555 million with a gross margin of 30.6%. Adjusted earnings per share rose 60.2% to $1.97. In the first half, net sales climbed 29.1% to $13,311 million. The company executed six acquisitions, boosting annualized revenues by $235 million. A 15% increase in interim dividends and an expansion of share buyback programs reflect strong financial health.

Positive

• Net sales increased by 31.8% to $6,508 million.
• Operating profit rose by 74% to $555 million.
• Earnings per share (diluted) increased by 60.2% to $1.97.
• Adjusted EBITDA grew by 59.8% to $1,462 million.
• Completed six acquisitions, adding $235 million in annualized revenues.
• Interim dividend increased by 15% to $0.84 per share.

Negative

• Operating profit slightly decreased from $588 million (adjusted) to $555 million (reported).
• Operating margin decreased from 10.2% to 9.7%.
• US net sales growth included a contribution from an additional trading day.

STRONG EXECUTION CONTINUES TO DRIVE PERFORMANCE

WOKINGHAM, UK / ACCESSWIRE / March 15, 2022 / Ferguson PLC (LSE:FERG)(NYSE:FERG):

	Three months ended January 31,
US$ (In millions, except per share amounts)	2022		2021		Change
	Reported(1)	Adjusted(2)	Reported(1)	Adjusted(2)	Reported	Adjusted
Net sales	6,508	6,508	4,937	4,937	+31.8%	+31.8%
Gross margin	30.6%	30.6%	30.4%	30.4%	+20 bps	+20 bps
Operating profit	555	588	319	350	+74.0%	+68.0%
Operating margin	8.5%	9.0%	6.5%	7.1%	+200 bps	+190 bps
Earnings per share - diluted	1.97	1.93	1.23	1.10	+60.2%	+75.5%
Adjusted EBITDA		648		391		+65.7%
Net debt(2) : Adjusted EBITDA		0.8x		0.6

Second quarter highlights

• Strong sales growth as core strengths drove market share gains in supportive end markets.
• Price inflation increased to high teens driven largely by finished goods.
• Operating leverage led to particularly strong profit growth.

First half highlights

• Sales growth of 29.1% and robust operating leverage led to operating profit growth of 68.3% (adjusted 62.5%).
• Completed six acquisitions, four within Q2, with annualized revenues of approximately $235 million.
• Repurchased $417 million of the $1.0 billion share buy back program announced September 28, 2021.

Corporate highlights

• Interim dividend increased by 15% to $0.84 per share.
• Increasing share buy back program by $1.0 billion to $2.0 billion. Through March 11, 2022 we have completed $659 million leaving $1,341 million outstanding which we expect to complete over the next 12 months.
• Vote to enable a US primary listing approved on March 10, 2022, expected to take effect May 12, 2022.

Kevin Murphy, Group Chief Executive, commented:

"Our associates delivered another excellent performance with continued market share gains and strong price realization while navigating industry supply chain pressures. We are pleased with earnings growth that significantly outpaced revenue growth to generate another quarter of strong operating leverage. Our balance sheet is strong and we continue to return capital to shareholders through the ongoing share buy back program, which we are increasing by an additional $1.0 billion.

"Markets remain supportive and we anticipate solid revenue growth in the second half as we begin to lap tougher comparatives. We continue to be mindful that first half tailwinds on gross margin will likely moderate but we are confident in our full year expectations."

⁽¹⁾ The results are presented in accordance with U.S. GAAP on a continuing operations basis.

⁽²⁾ The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled "Non-GAAP Reconciliations and Supplementary Information."

	Six months ended January 31,
US$ (In millions, except per share amounts)	2022		2021		Change
	Reported(1)	Adjusted(2)	Reported(1)	Adjusted(2)	Reported	Adjusted
Net sales	13,311	13,311	10,309	10,309	+29.1%	+29.1%
Gross margin	30.9%	30.9%	30.0%	30.0%	+90 bps	+90 bps
Operating profit	1,294	1,355	769	834	+68.3%	+62.5%
Operating margin	9.7%	10.2%	7.5%	8.1%	+220 bps	+210 bps
Earnings per share - diluted	4.38	4.43	2.63	2.61	+66.5%	+69.7%
Adjusted EBITDA		1,462		915		+59.8%
1 The results are presented in accordance with U.S. GAAP on a continuing operations basis. 2 The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled "Non-GAAP Reconciliations and Supplementary Information."

Summary of financial results

Second quarter

Net sales of $6,508 million were 31.8% ahead of last year, 28.5% higher on an organic basis with 1.4% from acquisitions, 1.8% from an additional trading day and a further 0.1% from the impact of foreign exchange rates. Inflation in the second quarter was in the high teens.

Gross margins of 30.6% were 20 basis points ahead of last year driven primarily by our ability to service customers while managing price inflation, offset in part by changes in business mix. Operating expenses continued to be well controlled as we focused on productivity and efficiencies while investing in our talented associates, supply chain capabilities and technology.

Reported operating profit was $555 million (adjusted operating profit: $588 million), 74.0% ahead of last year (adjusted operating profit growth: 68.0%) as strong revenue, gross margin expansion and good cost control led to strong operating leverage.

Reported earnings per share on a diluted basis was $1.97 (adjusted earnings per share - diluted: $1.93), an increase of 60.2% (adjusted earnings per share - diluted growth: 75.5%) with the increase due to the strength of the profit performance in the period and the lower share count arising from share buy back programs.

First half

Net sales of $13,311 million were 29.1% ahead of last year, 26.4% higher on an organic basis with 1.6% from acquisitions, 0.9% from an additional trading day and a further 0.2% from the impact of foreign exchange rates. Inflation in the first half was in the mid teens.

Reported operating profit was $1,294 million (adjusted operating profit: $1,355 million), 68.3% ahead of last year (adjusted operating profit growth: 62.5%) as strong revenue, gross margin expansion and good cost control led to strong operating leverage.

USA - second quarter

The US business grew net sales by 32.6% which comprised 29.4% organic growth with 1.4% from acquisitions and a further 1.8% from an additional trading day. Price inflation was in the high teens during the second quarter.

Residential end markets, which comprise just over half of our US revenue, remained robust during the quarter. New residential housing starts and permits continued to grow, as did residential repair, maintenance and improvement ("RMI") which performed strongly. Overall, Ferguson's residential revenue grew by approximately 29% in the second quarter.

Non-residential end markets experienced strong growth as demand continued to lap weaker comparators. Our non-residential revenue grew by approximately 37% in the second quarter and leading non-residential economic indicators continue to look strong.

Adjusted operating profit of $576 million was 64.6% or $226 million ahead of last year.

We completed four acquisitions during the quarter including, Safe Step California, an independent dealer licensed to sell and install our Safe Step products in California and Nevada, and RP Lighting & Fans, an own brand distributor based in Albuquerque, New Mexico. We also acquired Plumbers Supply Company of St. Louis, a distributor serving residential end markets in the Midwest, and Hot Water Products, Inc., a distributor of commercial water heaters and boilers in Wisconsin and Nebraska.

Canada - second quarter

Net sales grew by 18.7% with inflation in the high single digits. Organic revenue grew by 13.8% with 3.3% from two additional trading days and a further 1.6% due to the impact of foreign exchange rates. Both residential and non-residential end markets saw good growth and adjusted operating profit of $23 million grew by 76.9%, significantly outpacing revenue growth as a result of good operating leverage.

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SOURCE: Ferguson PLC

View source version on accesswire.com:
https://www.accesswire.com/693072/Ferguson-PLC-Announces-Results-for-Q2-and-H1-ended-January-31-2022

FAQ

What were Ferguson PLC's net sales for Q2 2022?

Ferguson PLC reported net sales of $6,508 million for Q2 2022, a 31.8% increase from the previous year.

How much did Ferguson PLC's earnings per share increase in Q2 2022?

The diluted earnings per share for Ferguson PLC increased by 60.2% to $1.97 in Q2 2022.

What is Ferguson PLC's reported operating profit for H1 2022?

For H1 2022, Ferguson PLC reported an operating profit of $1,294 million, a 68.3% increase compared to the same period last year.

What dividend increase did Ferguson PLC announce?

Ferguson PLC announced a 15% increase in its interim dividend to $0.84 per share.

How many acquisitions did Ferguson PLC complete in Q2 2022?

Ferguson PLC completed four acquisitions during Q2 2022.